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ELLIOTT WAVE ANALYSIS - Latest Market Commentary

Stock Indices

The S&P ended the week edging slightly away from record highs that traded at 2119.59 although activity was generally quiet whilst the latest U.S. GDP, Consumer Sentiment and Chicago PMI were released. An intra-hourly five wave impulse pattern is completing at current levels from 2041.88 so this would open the way for a modest retracement to begin the coming week prior to resuming higher afterwards. The larger pattern describes the Oct.’14 low from 1820.66 beginning a five wave impulse advance that currently locates prices in the middle of a 3rd wave – this means only temporary declines prior to continued upside acceleration. ###Ultimate targets remain towards 2257.49 although we anticipate this being reached sometime into mid-April. This upside target is equivalent to the Dow Jones (DJIA) futures trading towards 19500+/- and the Nasdaq 100 towards 4877.00+/-. In Europe, the Eurostoxx 50 is approaching the completion of a 3rd of 3rd wave within the larger impulse pattern developing from the Oct.’14 low. A counter-trend 4th wave is expected to begin the coming week to synchronise with a modest pullback for the S&P prior to resuming higher afterwards. The Xetra Dax is similarly unfolding into a 3rd wave high with the coming week expecting a 4th wave retracement to begin prior to continuing higher afterwards. In Asia, the Shanghai Composite index is trading higher in a 5th wave with upside targets to 3646.45+/- whilst India’s Nifty 50 unfolds also into a 5th wave with upside targets towards 9550.00+/-. A recurring theme of 5th wave upside action is replicated for Japan’s Nikkei with targets remaining unchanged towards 19500.00+/-. 2nd March 2015

Financial Updates Currencies

Currencies (FX)

The US$ index traded higher during the latter half of last week and thereby exceeded the 9511 high that was vital to maintaining a double zig zag downswing from the January high of 9552. Although in principle it would be legitimate to assume that Thursday’s low of 9405 completed a multi-week contracting-symmetrical triangle, this cannot be replicated for the Euro/US$. Therefore, we have to assume that both the US$ index and the Euro/US$ are still engaged in the counter-trend corrections that began from the January price extremes. In the case of the US$ index, this implies that an expanding flat pattern is underway, with current price advances labelled as wave ‘b’ within this sequence and measured to upside at 9583-86. Once tested, a reversal ###signature should trigger wave ‘c’ declines in the weeks ahead, with ultimate downside measured to 9292. For the Euro/US$, the situation is similar but fib-price-ratio measurements suggest that a horizontal flat is unfolding. Wave ‘b’ of this pattern is projected to downside at 1.1107 prior to a finalising upswing back to the February high of 1.1534. Sterling underwent some interesting volatile price moves during the last trading days which might give the impression of a trend change. Yet the important fib-price-ratio projections have not been met and this suggests a continuation higher during the next few weeks. Both of our counts are still valid but the short-term structure differs significantly – whereas the scenario that advocates a five wave impulse sequence from the 1.4951 low depicts a finalising ending diagonal with upside to 1.5625, the count that shows a double zig zag upswing from 1.4951 interprets the recent price action from 1.5481 to 1.5384+/- as a running flat prior to a finalising rally to 1.5608+/-. No news on US$/Yen so far – we are still waiting for a last sell-off to 11727-11661 to complete the multi-week triangle and allow for additional upside in the months ahead. Ultimate objectives remain towards 12618. 2nd March 2015

Financial Updates Bonds

Bonds (Interest Rates)

Last week’s trading was dominated by Janet Yellen’s statements to the Senate Banking Committee. She has stated that the Fed would soon delete the word ‘patient’ in describing its forward guidance on the timing of interest rate rises. But she was quick to add that the Fed were not on ‘automatic pilot’ to raise interest rates – rather, it was assessing the probability on a month-to-month basis. The US10yr yield traded higher following the statement from a low of 1.931 into Friday’s high of 2.052 before falling back towards the close at 2.000. Within the context of declines that began mid-February, this is seen as a temporary rally prior to continued declines. The US10yr yield is currently engaged in a 2nd wave corrective decline from 2.160 with the pattern taking the form ###of a zig zag. Interim downside targets remain unchanged towards 1.895 but ultimately extending to complete the pattern towards 1.748+/-. The medium-term outlook confirms a yield uptrend in progress. Meanwhile in Europe, a downtrend still prevails that began from the June ’08 high of 4.705% but more recently, the decline from the Sep.’13 high of 2.051 is described as completing a 3rd wave sequence with limited downside now as it approaches measured targets at 0.220%. The positive correlation between the US10yr yield and the DE10yr yield continues to fluctuate erratically basis the US10yr-DE10yr yield spread. For this reason, an attempt for the DE10yr yield to 0.220 is considered strong support even though the US10yr yield could stretch lower during the next month to continue narrowing the spread slightly even though a widening medium-term uptrend is in progress.2nd March 2015

Commodities

The US$ continues to remain close to its January highs and this is contributing to the downward progress of gold and silver. The depth of declines since forming highs last January with gold at 1307.40 confirms forecasts for lower lows during the next couple of months. The decline from the Aug.’13 high of 1434.05 is unfolding into an ending contracting-diagonal pattern with its 5th wave decline in progress from 1307.40. This must ultimately subdivide into a zig zag with interim downside targets for wave ‘a’ approaching completion. As we look slightly further ahead, ultimate downside targets for completing the diagonal pattern remain unchanged towards 1096.00-91.16+/-. Silver is equally unfolding into a five wave pattern from the Aug.’13 high of 25.12 but instead of a diagonal, it is unfolding into a five wave expanding-impulse pattern. But like gold, its 5th wave began a final decline from the Jan.’15 high of 18.49. So far, the subdivision of this 5th wave labels a series of 1-2’s prior to 3rd of 3rd acceleration. This is not expected to begin for another week or two as a counter-trend upswing is expected beforehand. Crude oil continues to plot two short-term scenarios for the next several weeks. ###The bullish count depicts the end of a 4-year counter-trend pattern as primary wave B into the late-Jan.’15 low at 43.58 but the new uptrend now in progress beginning with its 1st wave ending at 54.24 and a 2nd wave now in progress to 45.00+/-. The bearish count depicts the Jan.-Feb.’15 upswing ending at 54.24 as a counter-trend expanding flat with an additional but finalising 5th wave decline now in progress to 37.58+/-. A test to 45.00+/- will determine which ultimately prevails but we currently assign the bullish scenario as preferential status basis Brent oil’s advance from the Jan.’15 low unfolding into a five wave pattern. 2nd March 2015

LATEST ARTICLES

THE ‘INFLATION-POP’ - PRECIOUS METALS SET TO SURGE INTO RECORD HIGHS

Bloomberg hosted a Precious Metals Forum on 23rd May and WaveTrack International was invited to present our latest Elliott Wave price-forecasts. The event was sponsored by the CME Group and Johnson Matthey.

OUTLOOK & FORECASTS FOR 2013

Highlights:

  • The 2013 outlook for global stock indices and commodities remains very bullish and is entering the last stage of the ‘inflation-pop’ phase that originally began from the post-financial crisis lows of 2008/09
  • This is expected to ignite another period of asset buying that increases risk-on multiples by a minimum 45% per cent and in some cases as much as +300% per cent, sending some global stock indices and commodities into record highs
  • Shorter-term, there is a danger of a downward adjustment of -5-8% per cent, but then sharp price advances to resume
  • Commodity related stock indices and equities are expected to outperform as a sector during the next 12-16 months
  • Banking stocks to participate, but most will not exceed their pre-financial crisis highs

As always, this year’s Outlook & Forecasts for the next twelve months are created applying the Elliott Wave Principle for the assessment of pattern and price amplitude, also Cycle Analysis for the timing of the larger trend reversals. Not always do they jive, but they seldom contradict and more often, provide valuable insights into one or two variations of a similar theme within a seemingly unlimited amount of possibilities.

Even though this report outlines the price expectancy of all asset classes for 2012 it will also illustrate how this coming year fits together into the larger picture. The reasoning behind this is to move away from the 'black-box' stereotype and show you why the results relate to their specific outcome. Overall, this report deals with two different time-periods – long-term and inter-mediate term. Long-term refers to the uptrends from the Great Depression of 1932 onwards and inter-mediate term for the coming year and into 2013.

HOW TO INTERPRET EACH ELLIOTT WAVE CHART

What do you see when looking at an Elliott Wave chart? Just lots of numbers & letters overlaying the price data? – or do you see definable patterns that are immediately familiar? And how do you interpret the results of the analysis and put it into an effective trading plan? Read on and test your own knowledge of these subjects and much more...

A COMMODITY SUPER-CYCLE?

Recent reports of a Commodity Super-Cycle grabbed my attention for two reasons – first, this is diametrically different to the outlook I foresee developing during the next decade, and second, this terminology has surfaced at a time when various commodities have already undergone large percentage gains measured from the Feb.'09 lows

THE 'DEFLATIONARY SCENARIO'

The primary theme of this presentation focuses on a 'Deflationary' outlook, forecast as the dominant aspect continuing during the next decade. This is derived from analysing the Elliott Wave pattern structure of the CRB (Cash) Index during its expansionary period of the last 76 years.

THE 'FLASH CRASH'

The Update Alert! messaging service of EW-Forecast Plus responded to the sharp collapse and the following recovery of US stock indices during the volatile trading session on the 6th May.

OUTLOOK FORECASTS FOR 2011

This analysis centres around the S&P 500 that is used as a proxy for other global indices. The great bull market beginning from the 1932 low ends 68 years later in 2000 - other global indices peaked later in 2007 (75yrs) – some still continuing to progress.

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TESTIMONIALS

"I just wanted to congratulate you on the EW-Compass reports launch. I'd say all the work you've all put into this project is well worth it… never cease to be amazed by the harmony that you find between the fib relations you highlight and the Elliott count you propose. You are a true descendant of RNE, and I'm quite sure he'd have really loved to see your work… Another aspect that sets you apart is your deep knowledge of the how and why of pattern relationships between higher & lower degrees of the same price action. So much to learn there". - T.S.

ELLIOTT WAVE PATTERN

INTRODUCTION TO THE WAVE PRINCIPLE

The Wave Principle, often referred to as Elliott Wave is a unique methodology that applies Natures Laws, those encompassing the Natural Sciences and Universal Geometric Philosophies to the financial markets. It allows us to view price fluctuations as an organised process that can be non-linearly extrapolated to gain a glimpse into the future direction of trends, counter-trends and amplitudes on any market or contract traded around the world.

Expanding Diagonal Patterns - Do they actually exist? - Elliott's inclusion of the Contracting Diagonal

In R.N.Elliott's original treatise of "The Wave Principle (1938)", he introduces us to diagonal patterns for the first time on page 21. Under the heading, Triangles, Elliott describes the difference between horizontal triangles that represent hesitation within an ongoing, progressive trend and diagonal triangles that form the concluding 5th wave of a larger five wave sequence.

NEWS & EVENTS

Tradersworld Online Expo #12 – Starts 12th November 2012

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 12th Trader Expo held online for 7 weeks starting on 12th November 2012 and ending in the new year on 6th January 2013. Peter’s presentation is entitled “Elliott Wave Price Forecasts & Cycle Projections – Three Phases of the 18 Year Bear Market ~ ‘Shock–Pop–Drop’” for more information visit http://tradersworldonlineexpo.com/

Announcement: 123rd Battery Council & Trade Fair Convention in Miami, 1-4 May 2011

Peter Goodburn will be presenting his latest Elliott Wave analysis at the 123rd Trade Fair Convention of the Battery Council in Miami, 1-4 May 2011. Peter’s presentation is entitled "The Historical Price Trend of Lead and Applying the Elliott Wave Principle to plot its course into the Future".

ELLIOTT WAVE PRICE-FORECAST UPDATES